NFIB Weekly News
Leading the News
NFIB Chief Economist: Re-Open The Private Sector To Keep Recovery Going
NFIB Chief Economist William Dunkelberg wrote in Forbes (6/21) that economic growth was “stunning” in the first quarter of 2021, yet “was held back by shortages of microchips, houses, and labor just to name a few items.” Dunkelberg said, “Growth rates in states that have re-opened more quickly are substantially better than in states that have re-opened less, and unemployment rates are lower as well,” and concluded, “re-opening the private sector is probably the best recovery policy that government can undertake.”
Economy Grew 6.4% In First Quarter
The AP (6/24, Crutsinger) reported the Commerce Department said Thursday that the U.S. economy grew at an annual rate of 6.4% for the first quarter of the year, “setting the stage for what economists believe may be the strongest year for the economy in about seven decades.” Many economists believed that US economic growth has continued in the current quarter.
Business Investment Is Fueling Economic Growth. The Wall Street Journal (6/27, Chaney Combon, Subscription Publication) reported business investment is fueling economic growth that is likely to sustain the recovery. According to the Commerce Department, nonresidential fixed investment increased at a seasonally adjusted annual rate of 11.7% in the first quarter. Business investment also posted double-digit increases in the third and fourth quarters last year and is currently higher than its pre-pandemic peak.
Fed Raises Inflation Forecast, Shifts Timeline For Rate Increase
NBC News (6/16) reported on its website that the Federal Reserve kept interest rates steady Wednesday “but dramatically raised its forecast for inflation and shifted up the timeline for a rate hike.” In a statement, Fed officials “acknowledged rising inflation, hiking their expectation for inflation to 3.4 percent from a March projection of 2.4 percent.” In what NBC News calls “a significant shift,” a “number of Fed officials indicated that two rate hikes could come as soon as 2023.” On its website, CNBC (6/16, Cox) reported that in March, the Federal Open Market Committee said “that it saw no increases until at least 2024.”
The Washington Post (6/16) said the Fed “expects the labor market will continue to build strength.” Although the central bank “isn’t ready to stem inflation by raising interest rates just yet,” Fed Chairman Powell “sent the message that the Fed is attuned to rising prices and keeping a close eye.” Powell said at a news conference, “Shifts in demand can be large and rapid. ... Inflation could turn out to be higher and more persistent than we expect.” Powell “added that the Fed would be ready to respond quickly if inflation is broader or more persistent than projected.”
Republican Governors Credit “More Hands-Off Approach To The Coronavirus Pandemic” With Economic Recovery
Republican Governors Credit “More Hands-Off Approach To The Coronavirus Pandemic” With Economic Recovery The AP (6/12, Barrow) reported that GOP governors seeking reelection have started “trumpeting the party’s more hands-off approach to the coronavirus pandemic, trying to flip the script on an issue that helped Democrats win the White House and control of Capitol Hill in 2020.” The AP added that GOP governors attribute “a resurgent economy to their resistance to strict public health protocols they frame as shackles. At the same time, Republican challengers are hammering Democratic governors as slow to relax business restrictions, end mask mandates and reopen schools full time.”
Emergence From Pandemic Set To Let Loose Rush “Of Spending By Older Consumers.” Bloomberg (6/12, Pham) reported, “The world’s emergence from the coronavirus pandemic is set to unleash a wave of spending by older consumers, with increasing opportunities for investors in aging-linked stocks.” Bloomberg added that that’s the perception of money managers perceiving massive “pent-up demand from wealthy seniors for medical services and luxury goods.” Moreover, those managers anticipated that the compelled “adoption of the internet by older people during lockdown will open up this demographic permanently to e-commerce companies and social networks.”
Small Business Owners “Struggling At Record Levels” To Hire Workers
The Washington Post (6/4, A1) reported, “The U.S. economy added 559,000 jobs in May, staving off fears of a slowdown but falling short of the blockbuster recovery numbers that had once been expected to accompany growing vaccinations and an easing pandemic.” Business owners reportedly still have trouble filling open positions, and “nearly half — 48 percent — of all small businesses surveyed by the National Federation of Independent Business reported unfilled job openings, a record high for the business group and 26 points higher than the decades-long average of 22 percent.” NFIB Chief Economist Bill Dunkelberg was quoted saying, “Small business owners are struggling at record levels trying to get workers back in open positions. ... Owners are offering higher wages to try to remedy the labor shortage problem. Ultimately, higher labor costs are being passed on to customers in higher selling prices.”
May SBET Shows Many Small Businesses Report Unfilled Job Openings
The NFIB’s Small Business Economic Trends survey for May showed that a record-high of 48% of small business owners reported unfilled job openings, a trend that continues for the fourth consecutive month. NFIB Chief Economist Bill Dunkelberg said, “Small business owners are struggling at record levels trying to get workers back in open positions. Owners are offering higher wages to try to remedy the labor shortage problem. Ultimately, higher labor costs are being passed on to customers in higher selling prices.” The report states, “A net 34% of owners (seasonally adjusted) reported raising compensation, the highest level in the past 12 months. A net 22% of owners plan to raise compensation in the next three months, up two points from April.”
May Consumer Spending Stagnant As Inflation Climbs
The AP (6/25, Crutsinger) reported, “Consumer spending was flat in May with incomes dropping for a second month as the impact of the government’s pandemic stimulus payments waned.” There was, though, a considerable increase in inflation with prices not counting food and energy rising by the biggest magnitude in almost 30 years. The consumer spending reading “represented a marked slowdown following gains of 0.9% in April and a 5% surge in March, the Commerce Department reported Friday.” However, while incomes declined by 2%, wages and salaries rose 0.8%, “reflecting rising employment levels.” The AP adds, “Inflation tied to a gauge of consumer spending that is closely watched by the Federal Reserve increased 0.4% in May and is up 3.9% over the past 12 months.” That marked the biggest 12-month rise since 2008. Meanwhile, core inflation, which doesn’t account for food and energy prices, climbed .5% during May “and is up 3.4% over the past 12 months, the biggest jump since 1991.” Reuters (6/25) says, “There was, however, some good news on inflation. Consumers this month perceived higher inflation to be temporary, a survey showed on Friday.”
Republicans Warm To Taxing Tech Companies To Support Rural Internet Subsidies
Axios (6/28, Harding McGill) reported key Republicans “are warming to an idea that was once anathema to the party – leveling taxes on big American companies to pay for internet subsidy programs.” The source of revenue “could help shore up a struggling subsidy fund that supports broadband in rural areas, schools, libraries and hospitals.” GOP FCC commissioner Brendan Carr’s proposal to “force tech companies to pay into a pool of money used to fund broadband programs is gaining steam with some key lawmakers.” House Minority Leader Kevin McCarthy “called the proposal ‘thought-provoking,’ and his office notes that video streaming accounts for more than 50% of web traffic and online advertising is a $100 billion a year industry.”
Yellen: US “Well On Its Way” To Getting Past Economic “Crisis”
Bloomberg (6/16, Condon) reported that Treasury Secretary Yellen says the US “‘well on the way’ to a strong recovery from the Covid-19 pandemic, and urged lawmakers to turn to addressing long-run problems ailing the economy.” Yellen “said in testimony...before the Senate Finance Committee Wednesday that she came into her job in January hoping to help Americans ‘make it to the other side of the crisis.’” Yellen added, “Thanks to this Congress – and its passage of the American Rescue Plan – I believe we are well on our way towards that goal.”
The New York Times (6/16, Rappeport) reported that Yellen “urged lawmakers to pass President Biden’s $4 trillion jobs and infrastructure plans on Wednesday, warning that the United States must invest to combat ‘destructive forces’ that are holding back millions of Americans from prosperity.” Yellen “made the case that it is a critical time to deploy ‘ambitious fiscal policy’ to reshape the economy in the aftermath of the pandemic. She pointed to income and racial inequality, declining labor force participation and climate change as festering economic problems that need to be addressed.”
Business Owners Criticize SBA’s Handling Of Pandemic Aid
The Wall Street Journal (6/17, Omeokwe, Simon, Subscription Publication) reported last Thursday small business owners are expressing frustration over the SBA’s handling of its COVID-19 aid programs, especially those processed by the Office of Disaster Assistance. To face these challenges, SBA Administrator Isabella Casillas Guzman wanted to make the agency more customer-focused to ensure better delivery of the aid programs.
Latest CPI Data Shows Inflation Continues To Rise
Bloomberg (6/10, Pickert) reported that a Thursday release from the Bureau of Labor Statistics showed the consumer price index rising 0.6% in May from April, and 5% from a year earlier. The annual figure, Bloomberg said, is the largest annual gain since August 2008.
The AP (6/10, Crutsinger) reported that the rise in consumer prices “reflected a range of goods and services now in growing demand as people increasingly shop, travel, dine out and attend entertainment events in a rapidly reopening economy.”
The New York Times (6/10, Smialek) reported that “the strong monthly figure for May, which came on the heels of a sharp rise in April, showed that prices have been moving up quickly for more than just technical reasons. The critical question is whether those stronger-than-expected price pressures are a transient trend tied to reopening or something more persistent.”
Consumer Prices Continued Surge In May
The AP (6/10, Crutsinger) reported consumers in the US “absorbed another surge in prices in May – a 0.6% increase over April and 5% over the past year, the biggest 12-month inflation spike since 2008.” The increase in consumer prices reported by the Labor Department Thursday “reflected a range of goods and services now in growing demand as people increasingly shop, travel, dine out and attend entertainment events in a rapidly reopening economy.” Rising commodity costs were “forcing Americans to pay more,” and companies, including General Mills, Hormel, and Coca-Cola, have said they expect to raise prices.
Small Business Marketing
Goldman Sachs Coalition Pushing For Expanded Small Businesses Access To Federal Contracts
The Hill (6/25, Evers-Hillstrom) reported last Friday, “A business coalition led by Goldman Sachs, the Bipartisan Policy Center and Center Forward is pushing lawmakers to help small businesses access federal government contracts.” The Hill said over the past decade, “the number of small businesses contracting with the federal government shrank by 38 percent.” The Hill said Congress could either make the changes prescribed by the coalition to the procurement process within an infrastructure bill or in the SBA reauthorization coming in the next year.
Amazon Touts Success Of Small Business Selling Partners For Prime Day
Winsight Grocery Business (6/25, Strailey) reported that in the wake of the 2021 Prime Day, Amazon is “boasting most about the success of its small business selling partners – makers of typical grocery fare such as coffee, chocolate, health and beauty care items and pet products.” Amazon said that in “24 hours of the promotion, more than 2.5 million customers bought products from small businesses, and after the full two-week period, customers had spent over $1.9 billion on more than 70 million items, which was more than a 100% year-over-year increase on sales compared to the Prime Day 2020 promotion in October.”
Growing Number Of Businesses Position Themselves As “Anti-Amazons”
The Wall Street Journal (6/16, Mattioli, Subscription Publication) reported on the “growing group of businesses and organizations positioning themselves as anti-Amazons” and “working to unite small businesses that have lost sales and margins to the e-commerce giant and tap into concern about its growing clout and competitive practices.” These companies included ShopIN.nyc, Bookshop Inc, Shopify, and Facebook, among others.
T-Mobile Announces New Services Designed For Small Businesses
Small Business Trends (6/20) reported, “T-Mobile has launched new services designed to help small businesses succeed in a mobile-first digital transformation strategy.” The company’s “new services include offering Business Unlimited smartphone plans, which have unlimited 5G access, high-speed hotspot data, and greater Premium Data.” T-Mobile was “also offering Small Business Internet, which delivers fast and reliable connectivity without having to be tied into annual contracts or being subjected to any costly surprises.” Finally, the carrier “is offering Facebook advertising for small businesses.”
Even As Federal Spending Increases, Many Small Businesses Fear They Will Miss Out On Federal Contracts
CBS News (6/9, Ewall-Wice) reported that despite the increase in federal spending, many small businesses are finding it too difficult to compete for federal contracts. In a survey conducted by Goldman Sachs, 54% of small business owners found the federal procurement process too lengthy, 42% said they did not have enough information on opportunities, 42% found the process too complex, 41% said small businesses “are not adequately prioritized” which makes winning a contract less likely, and 31% said the process was too expensive. CBS reported the current Administration is working to fix these problems for small businesses. SBA Administrator Isabella Casillas Guzman “said contracting programs would be a top priority under her leadership as officials with the SBA have taken note of attrition among small businesses competing for contracts.”
Faire Raises $260M To Help Small Businesses Compete With Amazon
Reuters (6/10, Lee) reported Faire “raised $260 million in its latest funding round and is now valued at $7 billion, thanks to the fast growth in e-commerce following the pandemic.” The online wholesale marketplace “helps small retailers connect with small brands, helping them to compete with retail giants like Amazon.com Inc or Walmart Inc, said Faire Chief Executive and co-founder Max Rhodes.” According to Reuters, “There are an increasing number of tech companies that are helping small and medium-sized businesses grow online...making it possible to sell outside of the Amazon marketplace.”
Wages and Benefits
Unemployment Rolls Declining Faster In States Cutting Of Enhanced Benefits
The Wall Street Journal (6/27, Morath, Subscription Publication) reported the number of people receiving unemployment benefits is declining more quickly in states that are ending enhanced and extended payments this month, indicating that cutting off the assistance could encourage people to take jobs.
But, the New York Times (6/27, Cohen) said “in the St. Louis metropolitan area, where the jobless rate was 4.2 percent in May, those who expected the June 12 termination would unleash a flood of job seekers were disappointed.” Since Gov. Mike Parson (R) announced “made Missouri one of the first four states to halt the federal aid,” work-force development officials “said they had seen virtually no uptick in applicants. ... And the online job site Indeed found that in states that have abandoned the federal benefits, clicks on job postings were below the national average.” The Times added that “many economists are skeptical that enhanced jobless benefits have played an outsize role in the hiring squeeze. They are more likely to point to child care and continuing health fears with less than half the population fully vaccinated.”
Eight More States To End Enhanced Unemployment Benefits This Weekend
CNBC (6/16, Iacurci) reported on its website that “about 417,000 workers” will “lose unemployment benefits this weekend as eight states withdraw early from pandemic-era programs.” Starting last Saturday, “Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming are opting out of federal unemployment programs.” The states’ Republican governors “claim enhanced benefits are paying people to stay home, thereby creating labor shortages and making it difficult for businesses to hire.” In all, “25 states [are] turning down federal funds ahead of their official expiration on Sept. 6, which will affect about 4 million total recipients.”
Labor Crisis Gives Job Applicants More Options, Power To Make Demands
CBS News (6/17) reported that as millions of Americans quit their jobs, employers are being forced to provide higher wages, among other benefits to attract and keep workers. Companies like Walmart and Bank of America have announced wage increased to ensure worker retention, which resulted in an increase in applicant interest. The article reported, “Workers are in a rare sweet spot” now able “to push for more pay, better work-from-home arrangements and other perks they feel they need to stay, and with plenty of options if they leave.” Glassdoor Chief Economist Daniel Zhao “predicts this will accelerate for several months, as workers who stayed in less-than-ideal jobs during the pandemic search for greener pastures.”
Jobless Claims Hit Lowest Level March 2020
Reuters (6/10, Mutikani) reported that first-time claims for jobless benefits for last week fell 9,000 last week to a seasonally-adjusted 376,000, the lowest level since mid-March of last year. Claims “have now declined for six straight weeks.” Economists surveyed by Reuters expected claims to fall to 370,000.
WPost Interview 12 Business Owners Who Raised Wages To $15 An Hour More To Attract Workers
The Washington Post (6/10) reported, “businesses in sectors such as food service and manufacturing that are trying to staff up” have reported “a scarcity of workers interested in applying for low-wage positions.” Republicans “have blamed enhanced unemployment benefits for the shortage; Democrats and most labor economists say the issue is the result of a complicated mix of factors.” The Post cited interviews with 12 business operators “who raised their minimum wage in the last year,” which indicate “another element of the equation: the central role that pay – specifically a $15-an-hour minimum starting wage – plays in attracting workers right now.”
Labor Department: Unemployment Rate Falls From 6.1% To 5.8%
The New York Times (6/4, A1, Cohen) reported the Labor Department on Friday announced that US employers “added hundreds of thousands of jobs last month as coronavirus infections ebbed, vaccinations spread and businesses reopened,” but “the labor market’s recovery from the pandemic is proving to be choppy.” The Times added the jobs report “highlighted the puzzling fact that millions remain on the jobless rolls even as many employers complain of worker shortages.”
The AP (6/4, Rugaber) reported US employers “added 559,000 jobs last month [in] an improvement from April’s sluggish increase,” while the unemployment rate fell from 6.1% to 5.8%. The Wall Street Journal (6/4, A1, Omeokwe, Subscription Publication) reported the leisure and hospitality sectors led the May job gains with the addition of 292,000 jobs, but Axios (6/4, Brown) reported the construction sector “shed 20,000 jobs in May,” due to “a steep decline of specialty trade contractors.”